Phoenix Darren John Tims 19, and co-accused Atem Akoi Thon, 19, faced Melbourne Magistrates Court on Friday after applying for bail.
They were each charged with two counts of arson causing death more than four months after a deadly blaze in Sunshine North.
Atem Thon and his co-accused have been told they'll return to jail if bail conditions are breached. (James Ross/AAP PHOTOS)
Father-of-three Hai, 42, and a 48-year-old man died in the February 23 blaze that started at a panel shop and spread to a converted factory.
Defence lawyers on Thursday argued the teens should be freed on bail due to their young age, as they're both first-time offenders and because of delays that could prevent the case going to trial for up to two years.
Prosecutor Angela Liantzakis opposed bail, although accepted there was no evidence the pair were aware two men were sleeping in a factory out the back when the fire was lit.
She warned they were a risk to the community if released, having allegedly committed "extraordinarily serious conduct for low money".
Magistrate Malcolm Thomas found the prosecution had not established the pair were an unacceptable risk of endangering other people beyond "merely hypotheticals", as he approved bail on Friday.
Numerous supporters of the teens let out an audible gasp when they found out the pair would be granted bail.
Supporters of the teens gasped when they were granted bail. (James Ross/AAP PHOTOS)
Mr Thomas warned Tims and Thon they could be sent to prison if they did not abide by their bail conditions.
They include a curfew between 9pm and 7am, surrendering their passports, staying at their nominated residences, travel restrictions and a ban on contacting prosecution witnesses.
"If you don't comply with any of your conditions ... I will almost certainly revoke bail and you'll sit in custody for 18 months or two years," Mr Thomas told the pair.
"If you are found out and about at 11pm at night in breach of your curfew you can expect to go back into jail."
He said both could face a significant time behind bars if convicted.
Mr Thomas noted the families of the deceased opposed bail and described the alleged offending as serious.
Father-of-three Hai was one of the two men killed in the blaze. (HANDOUT/VICTORIA POLICE)
"The lighting of fires always carries with it the chance for significant harm and death," he said.
Detective Senior Constable Elise Jinks alleged Tims drove to the factory, jumped over a fence with a red jerry can of petrol and set it alight and Thon handed him the jerry can.
The pair was going to be paid $4000 by a prisoner to carry out the arson, she told the court on Thursday.
Tims was recorded on surveillance inside his car admitting much of the arson, including in a mid-July conversation with his girlfriend, the court was told.
